AGC Networks completes acquisition of Black Box Corp; stock rises 10%

Experts say India’s attractiveness as a hub for back office services could wane if such tax liability is imposed

Shares of AGC Networks locked in upper circuit of 10 per cent at Rs 115 on BSE after the company announced that its wholly-owned subsidiary has completed the acquisition of Black Box Corporation, a leading digital solutions provider in the US.

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“The combination with Black Box will substantially strengthen AGC’s presence and offerings in North America, Latin America, Europe and Asia. The acquisition will also help add US$600 million to AGC’s revenue, taking the company’s combined revenue to over US$750 million, and global headcount to more than 4,000 people serving clients worldwide," AGC Networks said in a press release.

A concrete benefit of this acquisition is the diversity of offerings, markets and clients between the two companies, with little overlap, it added.

The stock of IT consulting and software firm has a strong run-up, zooming more than 92 per cent in past one month from level of Rs 60.20. In comparison, the S&P BSE Sensex was up 3 per cent during the same period.

The company had reported a robust seven-fold jump in its consolidated net profit at Rs 16.76 crore during the first half (April-September) of the financial year 2018-19 (H1FY19). It posted a profit of Rs 2.39 crore during the same period last fiscal. Revenue grew 16.7 per cent to Rs 385 crore on YoY basis.

Till 01:45 pm; a combined 73,037 equity shares changed hands on the counter. There were pending buy orders for 21,700 shares on the BSE and NSE, the exchange data shows.